Hobart – old investment property depreciation claims!

It is true that for old properties, constructed pre-15th September 1987, Division 43 deductions for original construction works are no longer claimable. However, something that is often missed is that these older properties are rarely in their original constructed state. Often previous owners have completed new and/or additional construction works at the property such as upgrading a kitchen, bathrooms, adding a deck, garage, new flooring, walls, hard landscaping fences etc.

Those previous construction works, as well as any you have completed yourself, can still generate thousands of dollars in depreciation deductions each year for you as the current owner.

Our client Ashley was delighted with his depreciation results from his old house located in Hobart!  See further below for results.

What depreciation can be claimed for an old house?

Older qualifying houses are entitled to claim for Division 43 (the depreciation of the construction component of a building) for any works completed after 27th February 1992.  Division 43 encompasses things such as bricks, paint, tiles, gyprock, floorboards, aluminium window frames, and doors.

Also claimable under Division 40 is depreciation on brand-new ’plant and equipment’ assets, that you have installed yourself whilst the property is held as an investment. Examples of these assets include blinds, curtains, ovens, hot water systems, light shades, and carpet.

Second-hand ‘plant and equipment’ assets acquired through the purchase will be valued and reported to enable accurate accounting when capital gains tax is calculated after the sale of the property.

Case Study Depreciation Results

Our client Ashley thought his property was too old to claim depreciation for his property due to its age (1999 construction). Ashley spoke to his accountant who recommended he contact us for clarification.

Ashley purchased an older house located in Hobart in January 2024 for $935,000. The property consists of 4 bedrooms, 2 bathrooms and 1 car park.  The previous owners completed renovations in 2010 and 2016.  Ashley replaced the carpet in all 4 bedrooms after purchase.

Ashley was entitled to claim in depreciation:

In Ashley’s first full financial year of ownership, he claimed a tax deduction for depreciation of $6,351. Over the span of five years, total deductions amounted to $27,681, and over the life of the report (40 years) $205,893. This lowered Ashley’s taxable income and provided him with extra cash flow.

We were able to achieve these outstanding results for Ashley by utilising Division 43, which are claims for the property’s qualifying structural components.

There were no deductions available against the original construction works, however, Ashley is entitled to claim under Division 43 the construction works for the qualifying additions and improvements completed in 2010 and 2016.

How do you claim your depreciation deduction?

In order to maximise your depreciation deductions we recommend using a qualified quantity surveyor to undertake the process of preparing your capital allowance and tax depreciation schedule.

Here at Capital Claims Tax Depreciation, we have helped over 35,000 residential and commercial property investors claim maximum depreciation results Australia Wide since 2008.

How do I know if my older property is qualifying to claim the depreciation deduction?

For ultimate peace of mind, we will complete a free online feasibility assessment of your property first. We will notify you of what you are approximately entitled to claim in the first full financial year. That way you can make an informed decision on purchasing your depreciation schedule.

What do I need to provide when ordering my depreciation schedule?

We try to make the process as simple as possible for you. We start the process with the address of your investment property. Other information required will be:

• The name the property is held in;
• Purchase price;
• Settlement date;
• Details of access if necessary;
• Dates if you lived in the property;
• Date of when the property was available to rent;
• List of any improvements you have completed;
• Details of any brand-new furniture included.

Do I need to order a depreciation schedule every financial year?

No, you do not need to order a depreciation schedule every financial year.  It is a one-off payment that lasts you for the lifetime of the building. The fee is 100% tax deductible!

Get in touch today!

If you would like to discuss your older residential investment property, call and speak to Peter on 1300 922 220 today.  Or you can complete our simple ‘get a free quote’ online form. We will research your property and get in contact with you as soon as possible.